60 per cent cashew processing factories in Kerala face closure

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High processing costs and raw cashew crunch have hit the cashew processing industries in Kerala hard and at least 60% of them are facing closure. While India can process about 17 lakh million tonne cashew, it is able to produce just 7 lakh million tonne and hence relies on imports to utilise its processing capacity in total. The country is said to be importing processed kernels as well.

Though other cashew processing states like Maharashtra, Goa, Karnataka, Tamil Nadu, Andhra Pradesh and Orissa face a similar raw cashew crunch, they are slightly better placed as they are able to manage processing costs better than Kerala. Further, issues related to obsolete machinery, a non-conducive import and export policy and price disparity have been affecting most processing industries in the country.

According to Directorate of Cashewnut and Cocoa Development (DCCD), cashew factories in all these states except Kerala “at present are going well with the active involvement of industries department.

As for Kerala, V Shaji, commercial manager, the Kerala State Cashew Development Corporation Limited, informs, “In the state of Kerala around 60% of factories face closure. The reason behind the shutdown is high processing cost and non-availability of raw cashew.”

He however, adds, “We have asked the Central authority to look into the matter and are expecting some relief in the coming Budget with regards to relaxation in cashew kernel import duty. Recently, the Foreign Trade Investment has reduced the import duties to 9.36% for Least Developed Countries (LDC)”

Once a major exporter of cashew to the world by contributing 60% to the trade, India has now become a major importer, in the process losing out to smaller countries like Vietnam that are cashing in on the opportunity. In 2007-08, India exported 41% of its total processed cashew, which drastically fell to 24% in 2016-17. That is because 76% of the production and import went to domestic market consumption.

India’s cashew export has been falling in the last two years. From 118,952 (33%) in 2014-15, it plunged to 82,302 (24%) MT last year.

According to DCCD, “The Indian production of cashew nut for the year 2016-17 is 7.79 lakh million tonne which is not sufficient to run the processing factories available in various states, having a processing capacity of 17 lakh MT per annum. Hence, India has to depend on import of raw cashew nut from other countries.”

Thus, in order to run the factories round the year, the import was necessary for the country, and as a result several measures were taken to reduce the duty to allow cashew import to sustain the factories.

India has been resorting to imports mainly from African countries. India also imports from Brazil, Ghana, Guinea, Indonesia, Thailand, and Vietnam. During the year 2016-17, India imported 770,446 MT of raw cashew nuts from different countries, mainly from Africa. Whereas, India exported 82,302 MT of cashew kernels worth Rs 5168.78 crore during the year 2016-2017 wherein USA, Europe and the Middle-East continue to be major consumers of Indian cashews.

Export of Cashew Kernel, CNSL and Import of Raw Cashew Nut in India

Year

Cashew Kernel Export

CNSL Export

Raw Nut Import

Quantity (MT)

Value (Rs Crore)

Quantity (MT)

Value (Rs. Crores)

Quantity (MT)

Value (Rs. Crores)

2016-17

82,302

5,168.78

11,422

44.00

7,70,446

8,839.42

2015-16

96,346

4,952.12

11,677

57.59

9,58,339

8,561.01

2014-15

1,18,952

5,432.85

10,938

55.81

9,39,912

6,570.93

Experts feel that the sector is passing through a bad phase. The imposition of import duty on Raw Cashew Nut (RCN) and reduction in export incentives Merchandise Exports from India Scheme (MEIS) for cashew kernels is a setback for cashew fraternity. There is cutthroat competition from Vietnam for RCN and cashew kernels. Non-parity of RCN with cashew kernel price is another factor.

As a result, export has fallen. Shaji states, “For revival of the industry, the indigenous production of RCN has to be increased, roll back import duty imposed, enhance export incentives, enhance import duty of cashew kernels, partial mechanisation in the processing industry to be implemented.” Production, Export, Import, Consumption – Cashew Nut

Year

Area

(ha)

Domestic

Production

(MT)

Import of

Raw Nut (MT)

Total

Raw Nut (MT)

Total  Cashew Kernel processed (MT)

Export of

Cashew Kernel* (MT)

Domestic Consumption of  Cashew Kernel *(MT)

2016-17

1040890

779335

770446

1549781

340952

82302(24%)

258650(76%)

2015-16

1034990

670300

958339

1628639

358301

96346(28%)

261955(72%)

2014-15

1027000

725000

939912

1664912

366281

118952(33%)

247329(67%)

2013-14

100800

737000

771356

1508356

331838

114791 (35%)

217047(65%)

2012-13

982200

729000

892160

1621160

356655

104015 (29%)

252640(71%)

2011-12

970000

700000

809371

1509371

332062

131760 (40%)

200302(60%)

2010-11

945000

653000

529370

1182370

260121

105755 (41%)

154366 (59%)

2009-10

923000

613000

752854

1365854

300488

108120 (36%)

192368(64%)

2008-09

893000

695000

605654

1300654

286144

109523 (38%)

176621(62%)


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